Resume of Part I

Introduction

Chapter 1:

The Operations Functions

In the discussion of chapter one discussed on the operations function. The

following is a summary of the result that I took from the book Operations
Mangement. The purpose of this book is to provide a broad overview and survey of
the field of operations management for a first course. Decision making,
responsibilities, and the relasinship of operations to other business functions are
stressed. The functional orientation and the five decision categories are used as major
organizing principles.

Operation management is defined as decision makin for the operations

function and systems which produce goods or services. The history of operations
management includes seven major contributions: division of labour, standardization
of parts, industrial revolution, scientific study if work, human relations, decision
models, and computers. There is a great resurgence of interest in operations
management in both business and universities. This interest is being fueled by foreign
competition and the lack of productivity growth. The challenge will be met only by
integrating new ideas into operations practice.

Operation management, like marketing and finance, is a functional area of

business. As a functional area, the focus is primarily on decision making
responsibility and secondarily on methodology. Managers in operation manage the
transformation process which supplies goods and services. The transformation
process converts inputs (material, energy, labour, capital, and information) into

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outputs (goods or services). Changes in the environment frequently require
corresponding changes in operations.

Operation management is defined by five key types of decision respon

sibilities: quality, process, capacity, inventory, and work force. These five decision
categories are useful for thescribing an existing operation or identiflying the decisions
required to establish a new operation. A service is produced and consumend more or
less simultaneously. Sevice producing and good producing organizations differ in the
following characteristics: capacity, quality, dispersion of operations, and the
relationships of marketing and operations. Services and goods producers to pure
service producers. There are five critical themes in operations which need to be
considered to make operations more efficient, more competitive, and more effective
in meeting customer’s needs. These themes are emphasis on both service and
manufacturing operations, customer directed operations, continuous improvement,
integration of operations with other functions, and international operations.

Chapter 2

Operations Strategy

This chapter discusses gaining competitive advantage through operations

strategy. Operation strategy is a vision for the iperation function thet sets an overall
thrust or direction for decision making. The purpose of operations strategy is to
connect business strategy to decision making in operations. A consistent pattern of
decision making should be the result. Operation strategy consist of mission,
distinctive competence objectives and policies. The mission devines the purpose of
operations. Objectives are cost, quality, delivery, and flexibility. Distinctive
competence is what you do better than the competition. Polices are the strategic
decisions which guide more detailed decision making (tactics) in the areas of quality,
orocess, capacity, inventory, and work force. There inputs to operations strategy are
business strategy, external analysis, and internal analysis. Operations strategy should

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help the firmadapt to external factors, incluiding customer needs, thecnology, raw
material, legal or social conditions, and competitors.

Operations strategies and decisions differ depending on whether the company

is pursuing a product imitator or product innovator business strategy. There is no one
best operation for all circumantances. The emergence of the global corporation is
changing operations strategy by requiring a worldwide perspective toward facility
location, sourcing, product dsign, process thecnology, logistic, and organization.
Focused operations are more competitive than unfocused operations. Operations can
be focused by specifying only one mission for each plant or facility. Focused
operations generally utilize one or more of the following dimensions: product,
process, technology, volume, make to order make to stock, and mature or new
products. Operation effectiveness can be described by four stages: internally neutral,
externally neutral, internally supportive, or externally supportive. An operations
strategy is reqired for a business to achieve stage 3or 4 status.

Chapter 3:

Product Design

New product development has a great impact on the operation function,

because any new product which is designed must be produced by operations.
Furthermore, existing operations may constrain the development of new products.
This chapter deals with the nature of product design and its relationship to the
operations function. There are three ways to view the new product introduction
process: as market-pull, technology push, or interfunctional. The market pull view
corresponds to making what you can sell, while the thecnology push view is selling
what you can make. The interfunctional view is a combination of these two, which
requires cooperation between the functions in the designing pruducts. The
interfunctional approach usually produces the best result. However, it requires an
organizational approach which cuts across functional lines. The new product

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development process consist of six steps: idea generation, product selection,
preliminary design. Prototype construction, testing, and final design. In practice, this
process does not proceed sequentially from the beginning to end. Many interations
may be required.

Product should be designed from the start for manufacturability. This is done
personel, and by considering process design in the early stages of the product
development process. Often, this process ic called simultaneous engineering or
simultaneous development. Quality function deployment is a method for ensuring
that customer requirements are me by the product specifications. The house of quality
matrix is the specific tool used to establish these relationships.

Product should be designed to be robust in the face of changes in

environmental conditions. This will make the producteasier to produce and use.
Robusts design can be accomplished by the use of designed experiments which
consider environmental factors affecting product or process performance and
selecting the products design which is least affected by these factors. Value analysis
isa method for improving the usefulness of a good or services relative to its cost. This
is done by reviewing and improving the functionality of the product so as increases
its value. Modular production is an appoarch used to produce a wide variety of
products from a limited number of product components. This approach can be used to
control product proliferation by limithing the numbers of components or moduels
available.

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 My opinion of Part
1
In this part one are told how the scope of operations management. Where the
management of the business operations is optimally manage the use of production
factors , namely :

 Workforce
 Machines
 Equipments
 The raw materials

And other factors of production , in the process of transformation into a variety of

products and services. In this discussion is very important to know by an operations
manager and can be the guidance for an operating Manager performance to run well
through the functions of the management process from planning, organizing, forming
the staff, leadership and control. The main task of a manager is to direct the operation
of the output quantity, quality, price, time and place in accordance with the wishes of
consumers and take full responsibility in producing goods and services.

In these discussions, there is also a strategy in which the operation of the operating
strategy is a function that sets the direction for the operation of decision making are
integrated with business strategy through formal planning . The next one on the
design of a product that becomes a major determinant of production activities which
can attract customers, how to make products that are already in production can
compete with other products that are more mainstream and socially acceptable and
desirable so that the product gets success.

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 Resume of part 2

Quality management and control

Chapter 4:

Managing Quality

In the discussion of chapter one discussed on the managing quality. Quality

can be defined as meeting, or exceeding, customer and requiredments. Three are four
dimensions of quality which contribute to customer satisfaction: quality of design,
quality if conformance, the abilities, and field service. There is a cycle of product
quality from customer needs through quality of design, production, quality of
conformance, and use by the customer. This cycle is controlled by specifying quality
attributes, determining how to measure each attribute, setting quality standards,
estabilishing an operator inspection program, and finding and correcting cause of
poor quality. Continuous improvement of the system through prevention of defects is
the preferred approach.

Management should set an overall quality policy, and this should be

implemented through specific objectives set by managers at all levels. The total
quality concept utilizes a systems approach to quality by integrating quality programs
and objectives across organizational lines. In most organizations a positive program is
needed to implement the concept of total quality. Deming has argued thet
management needs to change in order of quality to improve. He also advocates the
aggressive use of statistical quality control techniques.

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 The cost of quality measures the lack of conformance to customer
requirements. Quality cost can conveniently be divided into control cost control cost
and failure cost. Control cost are due to prevention or appraisal. Failure cost may be
due to internal or external failures. Every company should measure and control these
costs of quality. The philosophy that says make it right the firs time serves to prevent
defects from occurring. The work force can be trained to reduce defects drastically if
it is given the responsibility. A zero defects program can be implemented through a
14-step program wich includes providing for management commitment,
measurement, motivation, and rewards, and then doing it over again.

Quality teams are an effective way to involve employees in quality and

productivity improvement efforts. The Malcolm Baldrige National Quality Award
was established in 1987 to promote quality in American industry. Criteria specified
for the award have be come the de facto definition for good quality management
practice.

Chapter 5:

Quality Control and Improvement.

Summary in this chapter are as follows. Quality control is defined as the

continous improvement of a stable process. The process is actually a sequence of
interconnected subprocesses, each whit is own internal customers. Crtitical points
must be defined for inspection and measurenment in order to control and improve
these processes. Inspection should be considered for the inputs, as part of the process,
and for the outputs. The critical control points for inspection are best described by a
flowchart of the process. As a general rule, inspection is done when the expected cost
of processing defective units further through the production process exeeds the cost
of inspection.

Statisticall quality control can be used based on acceptance sampling or

process control. With either of these approaches, measurement may be by attributes

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or by variables. In acceptance sampling, one or more samples is taken from a lot of
items. If the quality measurement in the sample is found acceptable, the entire lot is
accepted; otherwise the lot is rejected or another sample is selected before a decision
is made. In acceptance sampling, there are two types of errors; rejecting a good lot
and accepting a bad lot. These errors can be controlled to any desired level by
selecting a proper sample size and acceptance number. In process quality control,
periodic samples are taken from a continuous production process. As long as the
sample measurements fall within the control limits, production is continued. When
the sample measurements fall outside the control limits, the process is stopped and a
search is made for an assignable cause operator, machine, or material. With this
procedure, a production process is maintained in a continual state of statistical
control. It is preferable to use statistical process control over acceotance sampling
whenever possible, because SPC prevention oriented. SPC can be used as a basis of
achieving a certified supplier status, which requires a stable production process.

Several methods can be used for continuous improvement of quality chats, CE

diagrams, and aprocess capability studies. These methods can be used to reduce
variance of a stable process or to bring a process under control. In industry a high
percentage of manufacturing companies use acceptance sampling, process quality
control, CE diagrams, Pareto charts and 𝐶𝑝𝑘 calculations. The use of these statistical
methods has much less acceptance in the service industries.

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 My opinion of Part
2
The quality of a product or service to meet the needs without any defects. From the
consumer point of view, the quality of a product or service it is seen from the
usefulness and quality of the design. When viewed from the perspective of the
manufacturer, the quality of a product that was how the appearance of the resulting
product is in conformity with the standards set .

In this discussion it can be said as the quality management of all activities of the
overall management function that determine the quality of wisdom, purpose and
responsibilities and implement them through quality management tools such as :

 The quality planning

 Controlling quality
 Guarantor quality
 Improved quality

Also of course we need a good selection of technology to maintain the quality of a

product that has been created as well as how to take good care through improvements
already planned to expedite the production and improve the quality better .

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 Resume of Part 3

Process design

Chapter 6:

Process Selection
This chapter has emphasized process selection decisions, including selection
of process type and span of vertical integration. Process type was specified in terms
of two key dimensions product flow and type of customer order leading to six major
process type. The process produvt matrix was introduced as a way of describing the
dynamic nature of process selection and its relationship to market strategy.

There are three types of process flow: line, intermittent, and project. Line flow
is characterized by a linear sequence of oprations and product layout. Line processes
utilize specialized equipment, are very efficient, and are usually inflexible in adapting
to product or volume changes. Intermittent operations use a process layout with
similar equipment or skills grouped together. The resulting flow pattern is jumbled,
science the product is made in batches and flows through only the processes needed.
Intermittent operations are highly flexible but much less efficient than line processes.
The project is used to make a unique product. All task are sequenced to support the
single product being made. Projects provide the most flexibility but are usually quite
expensive.

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 Operation process can also be classified as make to order, make to stock, or
the hybrid assemble to order. The make to order process is set in motion by customer
orders and gearedto delivery performance. The make to stock process is geared to the
replenishment of inventory; it does not respond to specific customer orders. Make to
stock operations are measured by use of capacity, inventory levels, and stockout
performance. The combination of product flow with type of customer order yields six
types of operations processes. Selection from among these processes is made by
considering market conditions, capital requirements, labour, management skills, raw
materials, and technology. These factors are evaluated by conducting marketing and
economic studies, but the process selection decision is always strategic in nature.

The process product matrix describes stages in the life cycles of products and
processes. A firm should define its distinctive competence in terms of both process
and product by selecting a patch on the matrix. The matrix helps relate process
selection decisions to product decisions and the market. Vertical integration defines
the ownership questions in process selection. Forward integration extends ownership
of the process forward toward the market. Backward integration extends ownership of
the process backward toward suppliers. Both types of integration involveeconomic
considerations; however, backward integration is concerned with reliability of supply,
while forward integration is concerned with reliability of demand. All vertical
integration decisions should be viewed in a strategic context.

Chapter 7:

Service Operations Design

This chapter has emphasized the design of service products and processes. A
service is a product which is produced and consumed simultaneously. The customer
is frequently involved in the production of the service and influences the efficiency of
operations. Services consist of acts and interactions which are social contacts. Thus
services must be managed as human exchanges, not merely as programmed thecnical

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actions. The services cycle indicates the important contact points in the delivering
services.

The services triangle demonstrates the interaction among the customer,

people, the system, and strategy. These four elements are the important things for
operations managers to focus on in managing services. Services are provided in
bundle of goods and services. This bundle consists of facilitating goods, sensual
benefits, and psychological benefits. The customer seeks an appropriate mix of the
items in this bundle. Services may be defined as high contact or low contact in nature.
Generally speaking, low contact services can be made more efficient thanhigh contact
services when there is less involvement of the customer. Uncertainty introduced by
customer demands is more important than the level of customer contact itself.

The service matrix defines services by the degree of customization and

interaction and the capital intensity of the service. On this basis four types of services
are defined: service factory, service shop, mass service, and professional service.
Each of these service types has its own operations management tasks. The service
delivery system should designed to integrate physical and human elements with the
service strategy. A lack of integration often leads to poor performance. Each
interaction between the customer and the service provider is a moment of truth. The
level of service delivered is the summation of these many moments of truth which
occur each day.

Chapter 8:

Choice of Technology

In this chapter, we have considered the choice of process technology for

operations. thaTechno;ogy is that set of processes, tools, methods, procedures, and
equipment which is used to produce goods or services. This definition is broader than
simply equipment selection and includes choice of procedure and methods as part of
the technology. One of the most important points in the chapter is that technology

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12
choice, by fixing jobs and working condtions, also automatically includes social
choice. It is, therefore, important to consider the joint social and technical
consequences through the concept of a sociotechnical design. Through the use of this
concept, technologies are chosen to optimize both social and technical variables.
Sociologist and economist have proposed the concept that small is beautiful and have
advocated the adoption of both appropriate technology and voluntary simplicity.
According to this thinking, the effects of pollution, job dissatisfaction, and
environmental depletion may render intermediate technologies more appropriate than
the highest forms of technology for some types of production. In terms of this
approach, our analysis must include traditionally noneconomic cost of environmental
and social effects. The result could be a mix of high, intermediate, and lower
technologies.

Manager should have knowledge of the performance characteristics of

technologies the manage. These performance characteristic include possible effects
on inputs, outputs, process flow, and cost, which can be properly evaluated only by
managers. The factory of the future implies movement toward computer integration
of manufacturing functions. This can be done through a common database which
incorporates computer assisted design, computer aided manufacturing, robotics, and
materials requirements planning.

With the introduction of computers and th interconnection of previously

separate office components and offices, office technology is rapidly changing. This
new office technology promises to reduce the volume of paperwork, to reduce clerical
costs, and to enrich clerical jobs. In a similar way, the automation of service
operations offers great potential. As services are viewed in technical rather than
humanistic terms, automation and standardization become possible. This can result
not only in lower costs but also in more uniform quality. The choice of technology
should not be based solely on present value. The effects technology on operations
objectives, on the work force, and on the environment should also be considered. A
strategy for tecnhnological change should be devised.

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Chapter 9:

Process- Flow Analysis

This chapter has emphasized the analysis of transformation processes used to

produce goods or services. The system approach and two main types of analysis were
stressed: descriptive analysis through the use of process-flow models. Both these
forms of analysis can be used to improve the delivery, costs, quality, and flexibility of
the productive process.

A system definition is a pererequisite to process-fow analysis. Systems

definition requires isolation of a system for study and identification of the boundary,
customers, outputs, inputs, suppliers, and process flows. Both materials and
information flows can be analyzed by a common framework and common procedure:
that is, to describe the flows as a system through the use of flowchart and to ask
questions regarding what is done, who does it, and where, when, and how it is done.
The result of this analysis may lead to changes in any or all elements of the process (
output, raw materials, tools, equipment, jobs, methods, and information.).

In analyzing materials flows, four types of document are typically used

assembly drawings, assembly (Gozinto) charts, routing sheets, and flow-process
charts. These documents together describe exactly how the product is made and how
it flows through the production process. Information flows can be analyzed either as
the product itself or as management information used to plan and control production
of the product. In the same way as materials flows, information flows are depicted in
flowcharts wich are than analyzed to find ways of improving the process. Process
design should be deriven by customer needs and pursuit of the better ways to meet

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those needs. Every process has internal or external customers who must be
considered.

A societchnical approach is needed to consider physical flow design

simultaneously with the design of jobs. By using design teams, this approach should
result in processes which are both economically and humanly rewarding.
Mathemathical models can be used to study the design of production processes
described in terms of input, transformation, and output. A into practice. Classical
applications of process design through process-flow modeling are the job-shop
simulation and flows through facilities such as hospital, restaurants, and warehouse.

Chapter 10:

Layout Of Facilities

We have seen in this chapter thet layout decisions are higly dependent on the process
selection decisions which we assumed has been made prior to layout decisions.
Layout is then concerned with the arrangement of the phisycal processing facilities
within a given type of process (intermitten, line, or project). Service and
manufacturing layout decisions are treated within a common framework. Thus, the
same general principles, concepts and methods are used for both services and
manufacturing; but the application of these ideas may be slightly different, as we
have noted.

Intermittent operation present a challenging layout problem. In this case, the physical
arrangement of departments or processing activities must be determined to achieve
stated criteria within physical constraints. We have discussed both quantitative
decision criteria and qualitative criteria and the different methods used to solve each
case. Intermittent process layout problems of practical size usually require computer
assisted solutions. CRAFT and ALDEP are heuristic methods used in practice to
solve intermittent process layout problems.

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The line flow layout problem is quite different from that involving intermittent flows
because the direction of the flow of product has already been decided. The physical
arrangement of processing facilities is dicated for lin flows by the product
technology. There does remain, how ever, a problem assigning operations (processing
task)to work stations. In the single paced assembly line, the primary problem of
layout is assembly line balancing. Here the objective is to minimize the number of
workers for a given cycle time or vice versa. The solution to this problem can be
approximated by various heuristic methods which assign individual operations to
workers. Management should not arbitrarily specify cycle times because small
changes in cycle time can greatly affect the efficiency of the balance.

With regard to assembly line layout, perhaps the greatest problems facing operations
management today are the high levels of boredom, turn over, absenteeism, and
dissatisfication among workers. A possible solution is to consider alternative types of
assembly lines. For example, cycle time can be increased using two or more assembly
lines instead of one. If the process as labour intensive, this is a practical alternative
and can reduce the problems mentioned. Management should also consider various
forms of group or team assembly and assembly using flexible buffered lines which
allow more individual pacing.

The third type of layout problem is the project process. For projects, the product is
unique, but similar projects can be conducted at the at the sam site. The layout
problem is highly dependent on technological precedence and project scheduling,
since this determines the order in which materials and skills are used. A principle of
concentric circles was described for fixed location manufacturing and contruction,
where the product in in the center and material with high usage is staged in the inner
ciecles while materials with lower usage are placed in the outer circles.

Layout decisions still present a substantial challenge for management many layout
decisions have long-term effects wich cannot be easily reversed. These decisions

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determine the efficiency of operations as well as the design of jobs. It is thus
important to improve the practice of layout by using the best approaches available.

My opinion of Part
3
In this discussion we can know that the design process is an activity involving human
labor , materials and equipment to produce useful products either goods or services .
The design is the first step in a development phase for any engineered product or
system . The design is also defined as the process of the application of various
techniques and principles for the purpose pendefenisian a device , a process or a
system in sufficient detail to enable the realization of. In this case of course, we were
asked to create a more creative idea that we have to create a product design that
would be in the interest of the general public. But not only is it a creative idea to
introduce or promote products to the community is emphasized. It’s very important
for an operations manager for more direct and given an opportunity to any
subordinates to provide creativity and creative ideas that each employee in order to
freely give opinions or ideas they have.

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 RESUME OF PART 4

Capacity planning

Chapter 11:

Forecasting

Demand forecasts are crucial inputs to planning decisions within operations and other
parts of business. In this chapter, we have highlighted several important uses and
methods of forecasting.

Deffirent decisions require different forecasting methods, including the following

decisions in operations: process design, capacity planning and inventory
management. The available methods may be classified as qualitative, time-series, and
causal methods. Four of the most important qualitative methods are Delphi, market
surveys, life cycle analogy, and informed judgment. These methtods are most useful
when historical data are not available or are not reliable in predicying the future.
Qualitative methods are used primarily for long or medium range forecasting
involving process design or facilities planning.

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Time series forecasting is used to decompose demand data into their principal
components and thereby to project the historical pattern for-ward in time. The
primary use are short to medium term forecasting for inventory and scheduling
decisions. Some of the best know time series techniques are the moving average,
exponential smoothing, mathemathical models, and the Box-Jenkins method. Causal
forecasting methods include regression, econometric models, input-output models,
and simulation models. These methods attempt to establish a cause and effect
relationship between demand and other variables. Causal methods can help in
predicting turning points in time series data and are therefore most useful for medium
to long range forecasting.

Two types of errors in forecasting are bias and deviation. Both these errors should be
monitored rountinely to control the accuracy of the fore cast obtained. A forecasting
method shouldbe selected on the basis of five factors user and system sophistication,
time and resources available, use or decision characteristics, data availability, and
data pattern. In many organizations, different forecasts are made by different
departments, and there is no coordinated planning. This may be caused by confusion
about goals, plans, performance measures, and forecast. To help overcome this
confusion, probability forecasts can be used, and forecast errors should be monitored
after the fact.

Chapter 12:

Facilities Decisions

This chapter has described facilities decisions concerned with how much capacity is
needed, when it is needed, and where it should be located. These decisions are on the
long-range end of a hierarchy of capacity decisions which successfully constrain the
capacity available to operations. Facilities decisions are crucial because they
determine future availability of output and require the organization’s scarce capital.

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A facility strategy should be implemented rather than a series of incremental facility
decisions. A facilities strategy answers the questions of how much, when, where
located, and what type of capacity. The amount capacity planned should capacity
planned should be based on the desired risk of meeting forecasted demand. A
capacity cushion will be the result of the level of risk taken. The firm can choose to
either preempt the competition or wait and see how much capacity is needed. Both
economies and diseconomies of scale should be considered when setting an optimum
facility size. The type of facility selected will be focused on product, market, process,
or general purpose needs.

A procedure was suggested for analyzing facilities decisions, including,measurement

of capacity, forecasting of demand, determination of capacity needs, generation of
alternatives, evaluation of alternatives and deciding. This procedure can be used to
analyze any capacity decision or strategy. Facilities decisions are often made by the
chief executive and the board of directors. Because these decisions are strategic in
nature, they require the input not only of operations but of all other functional areas
as well. Location problems can be classified into four basic categories: single facility
location, plant and werehouse location, retail store location, and emergency service
location. Each of these problems typically has different decision criteria and utilizes a
different type of modeling approach.

Single facility location problems are those which do not interact with existing
facilities and can therefore be isolated for purposes of analysis. Theses problems are
also characterized by multiple criteria, and either additive or multiplicative scoring
models can be used. Plant and warehouse location problems are often formulated to
miny of supply capacity. These problems can be analyzed by either the transportation
method or simulation models. Location of retail stores may effect revenues as well as
costs. The revenue can be estimated by a drawing power model which relates travel
time and store size to store revenues. The resulting model estimates the effect of
competition at any given location. Emergency units can be located on the basis of

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response time rather than revenue. There are a variety of models which can be used to
locate these services.

Chapter 13:

Agregate Planning

Agregate planning serves as a link between facilities decisions and scheduling. The
aggregate planning decision sets overall output levels for the medisum time range. As
a result, decisions regarding aggregate inventory levels, work-force size,
subcontracting, and back-order levels are also made. These decisions must fit within
the level of facilities available, and they contrain the resources which will be
available for scheduling. Aggregate planning is concerned with matching supply and
demand over the medium time range. In the aggregate planning problem, the overall
output level is planned so as to use the best possible mix of resource inputs.

Supply variables which may be changed by aggregate planning are hiring, layoff,
overtime, idle time, inventory, subcontracting, part-time labor, and cooperative
arrangements. Variables which are available to influence demand are pricing,
promotion, backlog or reservations, and complementary products. When demand is
given, two pure strategies are available for adjusting supply: the chase strategy and
the level strategy. There are also many mixed strategies betweenbthese to extremes.
A choice of strategy can be made by determining the total cost of each of the
strategies available.

Many models for aggregate planning have been proposed. The three most widely
known model types utilize decision rules, simulation, or linear programming as a
solution methodology. Despite the number of models available and the favorable
result in a few cases, aggregate planning models have not gained widespread
acceptance in industry. A more concerted implementation effort may be needed
which includes careful definition of the decision problem in each case, tailor-made
models, and demonstration of improved planning results.

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Chapter 14:

Scheduling Operations

In this chapter, we have treated scheduling decisions for line and intermittent process
operation. The chapters’s theme is that all scheduling decisions deal with the
allocation of scarce resources to job’s activities, task, or customers. We assume, for
scheduling purposes, that recources are fixed as a result of aggregate planning and
facilities decisions. Within the available recources, scheduling seeks to satisfy the
conflicting objectives of low inventories, high efficiency, and good customer service.
Thus, tradeoffs are always implicitly or explicitly made whenever a schedule is
developed. Scheduling, however, differs between line, intermittent, and project forms
of operation.

The scheduling of line process operations is concerned with producing multiple items
on a single line. If you one product is produced on a line, there is no scheduling
problem because the line is ultized to the extent needed for the single product. For
multiple products, runout time calculations can be used to determine a schedule
which allocates line capacity among the products. There are a variety of scheduling
decisions for intermitten process operations. One of these involves regulating the
input to the intermittent process. Too little input will result in low inventories, low
utilazion of labor and machines, and fast customer service. Too much input will result
in high inventories, high utilization, and long customer delivery times. The concepts
of input-ouput control are used to regulated inputs in relation to outputs and available
capacity.

A second scheduling decision for intermittent-process operations is the loading of

work centers. Both forward and backward loading are used to determine capacity
needs, delivery due dates, and a smooth work flow. Loading utilizes average queue
times and thus only approximates the aggregate load on facilities. For scheduling
individual jobs, either sequencing or dispatching rules may be used. If sequencing is

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used, a gantt is developed which shows exactly when each operation is planned for
each job. When dispatching rules are used, jobs are selected for the nex operation on
the basis of prescribed priority rules. These priority rules are used to control the flow
of work dynamically as it progresses through a facility. When dispatching rules are
used, a Gantt chart or sequence is not constructed in advance.

To be useful, scheduling methods must be embedded in an information system.

Scheduling system, in general, should answer the following questions:

1. What delivery date do I promise?

2. How much capacity do I need?
3. When should I start each particular activity or task?
4. How do I make sure that the job is completed on time?

In order to handle constantly changing situations, these systems are usually

computerized, and they require constant feedback on job status. Lead time is not a
statistical phenomenon. Lead time is a function of both capacity and priority
decisions.

Chapter 15:

Planning and Scheduling Projects

The planning and scheduling or projects is concerned with the unique, one time
production activity. Because projects are unique, the scheduling problem is quite
different from that of ongoing operations. There three objectives in project are time,
cost, and performance. Because these objectives conflicting, tradeoffs between them
must constantly be made in the course of managing projects. All projects go through
three phases: planning, scheduling, and control. The planning phase establishes the
objectives, organization, and resources for the project. The scheduling phase
establishes the time schedule, cost, and personnel assignments. The control phases

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monitors the progress of the project in cost, time, and performance; it also corrects
the plan as necessary to achieve project objectives.

The Gantt charth is a scheduling method for displaying project activities in a bar-
chart form. The Gantt charts is usefull for small projects or projects where activities
are not highly interrelated. There are three network scheduling methods: constant-
time. PERT, and CPM. All these methods rely on a netwprk or graph to represent the
precedence relationship between activities. A network allows one to identify the
critical path, slack, and activities which need to be rescheduled. The critical path is
the logest time path of activities from the beginning to the end of the network.
Activities on the critical path have zero slack they must be completed on time to
prevent slippage of the project completion date. Slack in the amount of time that an
activity or event can be extended, while still allowing the project to be completed on
time. The earliest and latest occurrence time for each event is computed by means of
a forward and backward pass through the network. The early start, late start, early
finish, and late finish times for each activity can also be computed by means of a
forward and backward pass.

PERT is a network based project scheduling method which requires there time
estimates for each activity: optimistic, most likely, and pessimistic. Using these three
time estimates, a probability of project completion by any specified date can be
computed, along with the standard start and finish times for each activity or event.

CPM is a network-based method which uses a linear time-cost tradeoff. Each activity
can be completed in less than its normal time by crashing the activity for a given cost.
Thus if the normal project completion time is not satisfactory, certain activities can be
crashed to complete the project in less time

PDM is a network method which shows activities on nodes. Relationships between

nodes are indicated by arrows, which can depict a variety os start an finish
relationships.

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 My opinion of Part
4
In this chapter we know that scheduling and capacity planning with linear
programming optimization model is a linear equation with respect to the allocation of
resources that are limited and perpetually optimal . Scheduling and capacity planning
developed by George Dantzing programming, a mathematical of the United States in
1947, so that linear programming can be applied, the following basic assumptions
must be met .

 The problem must be converted into a mathematical problem , which means

that the real issue should be used as a mathematical model in the form of
linear and non- linear equations .
 Overall permasalaha system can be divided in units of activity

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  Each activity must be determined precisely . Neither the type nor the location
in the model linear programasi
 Every activity must be qualified so each value can be compared

This is needed by an operations manager in analyzing a business location or locations

to be used for business, so can easily identify and quickly design a business location
that is going to do with the mathematical approach .

RESUME OF PART 5

INVENTORY MANAGEMENT

Chapter 16:

Independent-Demand Inventory

Inventory management is a key operations responsibility because irt greatly affects

capital requirements, costs, and customer service. This chapter provides an overview
of inventory management together with specific methods for the management of
independent-demand inventories.

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Inventory is a stock of materials used to facilitate production or to satisfy customer
demands. Inventories include raw materials, work in process, and finished goods.
Decision problems in inventory management include what to carry, how much to
order, when to order, and what type of control system to use. A decision rule specifies
how much to order and when. In the calculation of decision rules, there are four types
of inventory costs to consider: item cost, ordering cost, carrying cost, and stockout
cost. The relevant costs to include are those which vary with the decision to be made.

The economic order quantity (EOQ) assumptions include a constant demand rate,
constant lead time, fixed setup time, no stockouts, lot ordering, no discounts, and a
single product. Within the assumptions made, the EOQ formula minimizes both
holding and ordering costs. A continuous review system provides one way to handle
random demand. When the stock position drops to the reorder point R, a fixed
quantity Q is ordered. The time between orders will vary depending on actual
demand. The value of Q is set equal to the EOQ. The value of R is based on the
services level desired.

A periodic review system provides another way to handle random demand. The stock
position is reviewed at fixed intervals P, and an amount is ordered equal to the target
inventory T minus stock position. The amount ordered at each review period will vary
depending on actual demand. The value of P is set by use of the EOQ, and the value
of T is based on the services level desired. The choice between P and Q system
should be based on the timing of replenishment, type of record keeping, and cost of
the item. A periodic system should be used when inventory orders must be regularly
scheduled.

High services levels require high investment levels for a given order quantity (Q) and
forecast error (o-). Management should, therefore, study the service level and
investment relationship before setting the service levels desired. Comparisons of
turnover rations do not, by themselves, provide an adequate basis for decisions on
inventory level. Also, management should seek to continuously reduce Q and o- . an

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inventory control system should do five thing: count transactions, implement
inventory decision rules, report exeptions, forecast, and report to top management.
There are four basic types of inventory control system: single-bin, two-bin, card-file,
and computerized. The choice be tween the systems should be based on a cost-benefir
comparison. The ABC inventory concept is based on the significant few and the in
significant many. The concept should be used to carefully control the significant A
items and to spend less effort and cost on the B and C items.

Chaper 17:

Materials Requirements Planning

Material requirements planning is based on the concept of dependent demand. By

exploding the master schedule trough the BOM, it is possible to derive demand for
component parts and raw materials. Yhe MRP system can them be used to plan and
control capacity, and it can be extanted to resource planning throughout a
manufacturing firm.

MRP is an information system used to plan and control manufacturing. There are
three types of MRP system:

1. An inventory control system (order launching)

2. A production and inventory control system (closed loop)
3. A manufacturing resource planning system.

Each of these systems expands the scope and use of MRP. The parts explosion
process has three principal inputs: master schedule, BOM, and inventory records.
There are two principal outputs: purchase orders and shop orders. Parts explosion is
the heart of the MRP system. MRP uses a requirements philosophy where parts are
ordered only as required by the master schedule. Past demand for parts is irrelevant,
and component inventories are not replenished when they reach a low level.

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Master schedules should be based on both marketing and production consideration.
They should represent a realistic build plan within factory capacity. Top management
should use the master schedule to plan and control the business. The BOM contains
the list of parts used to make the product. To maintain the accuracy of the bill of
materials, an engineering change order (ECO) system is needed. The accuracy of the
inventory record system should be maintained through cycle counting. Daily cycle
counting can be used in place of annual physical inventories.

Shop flor control is used to control the flow of materials through the factory. This is
done by managing lead times dynamically as the product is manufactured. If lead
times are properly managed, much safety stock can be eliminated. A successful MRP
system requires

1. Adequate computer support

2. Accurate data
3. Management support
4. User knowledge

Both system and people problems must be solved to use MRP successfully. When
this is done, benefits includereduced inventory, increased customer service,
andimproved efficiency. All manufacturing and services companies can benefit from
MRP if it is properly installed and operated. This includes large and small companies
and all industries.

Chapter 18:

Just-in-Time Manufacturing

The JLT system was described in this chapter as a major approach repetitive
manufacturing. We have seen how parts should be produced just in time rather than
just in case they are needed. This is accomplished by a simple visual system of
production control and dedication toward constant reductions in inventories.

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The JLT system is based on philosophy of eliminating waste and utilizing the full
capability of each worker. This system was originally developed in Japan but is now
being used in the United states. The objectives of JLT is to improve return on
investment. This is done by increasing revenues, reducing cost, and reducing the
investment required. To use JLT, the master schedule must be stabilized and leveled.
This requires constant daily production, within the time frame of the master schedule,
and mixed model assembly. As a result, the demand on preceding work centers is
nearly constant. The kanban system is used to pull parts through to meet the master
assembly schedule. A fixed number of containers is provided for each part required.
When these container re full, no more parts are produced, thus limiting the inventory
of each part. Constant improvement activities are encouraged by workers and
management to reduce the number of containers, size of containers, and inventory.

Reducing lot sizes, setup times, and lead times is the sky to decreasing inventories in
a JLT system. The objectives is a lot size of 1 unit. This is done through small-group
improvement activities and management and labor cooperative efforts. JLT affects
plant layout by requiring much less space and encouraging movement toward group
technology layouts. Jlt requires multifunction workers who can operate several
machines and perform setup, maintenance, and inspection activities. Moving to ward
a flexible work force will require changing yhe way workers are selected, trained,
evaluated, and rewarded. New supplier relationship must be estabilished to make JLT
work. Frequent deliveries and reliable quality are required. Often, long-term single-
source contracts will be negotiated with suppliers.

Implementation of JLT system requires a stage progression of activities. Top

management must provide leadership and support. The final assembly schedule must
provided leadership and support. The final assembly schedule must be leveled,
followed by leveling of fabrication processes and supplier schedules. Lost sizes and
lead times must be reduced for all stages of production. Intensive education of
workers and management at all levels is needed.

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JLT system are best suited to repetitive manufacturing. MRP is suited to job shop
production, and mixed MRP-JLT system are best for semi repetitive batch
manufacturing. Time-based competition is a popular way of using time as the basis
for competing by rapidly introducing new products or producing existing products
faster through JLT and quality management

My opinion of Part
5
This chapter has discussed the inventory where inventory management aims to
determine the balance between inventory investment with customer service. In this
case the operations manager is required to make a system. A system for managing
inventory :

 How goods inventory can be classified

 How accurate inventory records can be maintained

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These analyzes are needed by an operations manager for the attention of a stock
before production. An operations manager must strictly control the delivery of the
dating and effective control over all goods

In this chapter there are also models of inventory is comprised of :

 Models economic quantity that a fundamental

 Production order quantity model
 Models quantity discounts

Resume of part 6

Work-force management

Chapter 19:

Managing the Work Force in Operations

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The thrust of this chapter is to provide a broad perspective regarding management of
the work force in operations.

The-work force manager’s primary objectives should be improvement of performance

(quality, cost,flexibility, and delivery). Worker satisfaction is not, by itself, a primary
objective, but satisfaction may be achieved along with improved performance. Many
people are involved in managing the work force: top managers, supervisors, middle
managers, unions, and staff specialist. As a result, the supervisor can be caught in the
middle between opposing interests. To prevent this situation, supervisors should have
authorithy consistent with the responsibility assigned to them.

The principles of work-force management are match the worker and the job, set
standards of performance, clearly define responsibilities, ensure communications and
employee involvement, provide training, ensure good supervision, and reward people
for performance. These principles are derived from behavioral theory and
management practice. The Japanes style of work-force management utilizes worker
responsibility for production, lifetime employment, continuous training, and uniform
promotion. Many of these approaches are being used in the united states.

A new philosophy of management is emerging which is entrepreneurial and action-

oriented in nature. It emphasizes hands-on management which is close to the
customer and can achieve productivity improvement through people. It deemphasizes
rigid control, elaborate planning, or excessive analysis. This chapter emphasizes the
need for a coherent philosophy about the work force. The philosophy should be
oriented toward the business environment and the operations strategy. This vision of
the business and the associated role of people should be in place before specific
people oriented programs are pursued, for example, quality teams or employee
training.

Chapter 20:

Job Design

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This chapter presents a sociotechnical view of job design. Under the sociotechnical
approach, several technical alternatives are examined for their social impacts, and the
best alternative considering both social and technical factors is selected. As a result,
the job should provide higher productivity and satisfaction than when only one set of
factors is considered. Job design refers to the assignment of specific tasks and
activities to an individual or group of workers. The job or jobs involved should be
completely specified as to content and responsibilities by job design.

Job design is only one organizational design mechanism which affects productivity
and the quality of working life. Thus, one should examine the possible effects of
supervision, pay, personnel selection, and other factors before redesigning jobs.
Scientific management, a method for designing jobs, stresses research to discover the
best work method, worker selection, training, and management and labour
cooperation to install the new method. To utilize the scientific management approach,
management must share productivity gains with the workers and must ensure job
security. Under these conditions, workers will usually no longer restrict output and
will accept scientifically developed methods.

Job enrichment is an approach to job design which stresses the motivating potential in
the work itself. According to Hackman and Oldham, several different implementing
concepts can be used to improve personal and work outcomes provided that
individual has a sufficiently high growth need. The implementing concepts are
combining task, forming natural work units, establishing client relationships, adding
vertical loading, and opening feedback channels. The use of these implementing
concepts should lead to changes in core job dimensions, critical psychological states,
and finally personal and work out comes.

Prior to job enrichment, a formal job diagnosis should be made. The diagnosis should
determine whether job enrichment is needed and, if so, what implementing concepts
should be used. New plants have been designed which utilize different approaches to
employee selection, job design, pay, organization structure, and management style.

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These approaches, when combined with advanced technology, can be used to obtain a
siciotechnical system design for a new or upgraded plant.

Chapter 21:

Performance Measurement and Improvement

National productivity can be measured by either total factor or partial ratios. The total
factor productivity ratio is the best one because it consider all inputs used to produce
output. Total firm productivity should be measured by the ratio of output at standard
prices (or costs) to the sum of labour, material, overhead, and capital costs.
Operations performance should go beyond productivity measures which are
concerned primarily with unit cost of production. Additional operations measures of
importance are quality, delivery, flexibility, and innovation.

Benchmarking of best practices should be used to improve operations performance. It

should focus on analysis and implementation of the best processes wherever they can
be found. Work can be measured for direct labor by time standards, predetermined-
data, or historical data approaches. The resulting measurements are most useful for
planning, scheduling, and costing, since direct labor is responsible for doing much
more than producing the maximum number of units in a given amount to time. Work
sampling is a useful approach for measuring the activities of indirect labour, staff, or
management. It provides an estimate of the proportion of time spent on various tasks.

White-collar productivity can be measured by carefully defining the job of the white-
collar worker. White-collar jobs usually involve creative and innovative aspects
rather than repetitive task. Performance improvement is a goal of management.
Workers cannot be expected improve performance unless there is a clear connection
between performance and their welfare. One way to establish this conection is
through wage incentive plans or productivity sharing. Another way is through
collective bargaining or through a consistent management track record of higher
wages for improved productivity.

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Wage incentives have been shown to improve productivity in cases where an
adequate productivity measure can be established and where management and
workers support the incentive plan. Many types management and workers supports
the wage incentive plan. Many types of individual and group incentive plans have
been used including straight-piece-rate, bonus, measured-day-work, Scanlon,
IMPRO-SHARE, and profit-sharing plans. The experience curve specifies the
relationship between unit cost and cumulative volume produced. Each doubling of
volume reduced cost by the amount of the experience rate. Competitive advantage
can be gained, in some cases, by following the experience curve.

My opinion of Part
6
This chapter has discussed the workforce management is an area of management such
as:

 Production management
 Marketing management
 Financial Management

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  Management office
 Workforce management

But in this chapter are preferred on workforce management. Where labor is

synonymous with the term istila personnel , inside cover

 Labour
 Employees
 Employees

Workforce management is the utilization, development, regulation, workforce

development elements, both having the status of workers, employees, and employees
with all their activities in an effort to achieve results and dayaguna profusely, in line
with expectations and individual businesses, business entities, and the healthcare
institutions instansi.dalam this highly charged level of effectiveness of labor

RESUME OF PART 7

Globalization of operations

Chapter 22:

International Operations

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This chapter examined the role of operation in international business and the impact
of international business on operations.

There are three types of international companies: global, multinational, and export.
The global firm operates in a worldwide market on the basis of global economies of
scale and coordinated decision making. The multinational firm is descentralized by
country, and each foreign subsidiary is treated as a separate business. The export firm
exports products for sale licenses its technology for use abroad. Operation decision
making is affected by the environments of the countries in which the company
operates. Understanding the effects of these different environments ( social, political,
economic, and legal) is the key to managing international operations.

International business strategy can be based on low cost or differentiation. These

strategies can be succinctly defined by the value chain for design, production,
distribution, sales, and service of the product. Locating parts of the value chain in
different countries is the essence of international strategy. Studies have shown that
the best technology is not only the one with the lowest costs, but considers
competition, product differentiation, and quality. Technology can be transferred by
wholly owned subsidiaries, licenses, or joint venture. Knowledge must first be
condified for orderly international transfer of technology.

Facility location should be based on a low cost or product differentiation strategy.

Many other economic, social, legal, and political criteria should also be considered.
Outsourching should follow a strategy driven approach. Much outsourching is done
by catalog shopping or franchising in order to minimize costs. Outsourching depends
on life cicle, proprietary nature of technology, expertise of suppliers, and return on
investment. Drawbacks of outsourching are the loss of technical expertise and hidden
costs. World-class competitors seem to follow a common set of principles for
infrastructure. These include a policy of putting the customer first, quality
consciousness, employee involvement, JLT, an emphasis on technology, long-term

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orientation, and a bias for action. These principles are followed by the best Japanese,
German, and American companies.

My opinion of Part
7
This chapter discusses the world where global competition has been dating. So it
takes a force capable of competing in a global market that is not easy to do. In this
case the operations manager must have a global view of operations strategy , the rapid
growth in world trade as a world without limits, resulting in many organizations
expand his organization not only domestically but also abroad. In this case the
strategy and creative ideas are needed as well as extensive knowledge to achieve a
desired achievement of course with hard work and strong embroidery in conducting a
competition among the world .

Operations Management

Decision Making in the Operations Function

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This book was written by Roger G. Schroeder that discusses all the functions of
Operations Management. This book is very good and worth to. Especially for
students who pursue the world in the field of operations manager. But as human
beings who are not perfect, this book certainly has the goodness and weakness. As
someone who has read this book, and so I write kindness and weakness of this book
in my opinion as a reader.

As for the goodness of this book is:

 Can be easly understood

 Exposure is complete and clear
 There are examples of cases that allows us to better understand the contents of
any material
 The exercises contained in the book
 Knowledge of the wider operations managemet
 Very suitable to study an operations manager
 Coverage and add insight

As for the weakness of this book is:

 Lack of expert opinions

 Coverage is only for the exstensive effort

Behind kindness and weakness of this book, I think every material conveyed in this
book is very pecise and very nice to be learned.

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